Searching for the Moon

Shannon Clark's rambles and conversations on food, geeks, San Francisco and occasionally economics

The power of names – and other shortcuts

Posted by shannonclark on June 17, 2004

or how Branding and Networks interact

This afternoon, while walking along Milwaukee Ave to the North Ave bus home, I stopped at a store I had walked past for years, but had never entered. The store, Aldi is unassuming, a large store with a parking lot but little signage, advertising, or even much activity. Entering there is a flyer advertising specials with the first hint that something unusual is going on, none of the brands or products being advertised are recognizeable.

Inside the layout is beyond simple, 4 large open aisles with products stacked inside of the boxes they were shipped in, and small, simple signage with the prices – which are uniformly low. Mostly foods, generally in large portions. In the back are refrigerators and freezers, a small selection of fresh foods and some products and a very small selection of pharmacy products. In front there are a few cashier stations, but only one cashier and one security guard. If you want bags, you have purchase them, $0.05 for a paper bag, $0.10 for a plastic, $0.50 for an insulated bag.

On their website, they describe themselves as:

Aldi is an international retailer specializing in a limited assortment of private label, high-quality products at the lowest possible prices. Our unique way of operating makes it almost impossible for competitors to match our combination of price and quality. This means ALDI can offer Incredible Value Every Day.

So, what does my shopping this afternoon for a few bargains have to do with networks?

I have been thinking about Networks a lot of late, about how I might sell myself (and my company JigZaw’s consulting services). I realized that though we have a name that is fairly unique and memorable, a potential brand, we do not have name recognition – at least not with those people who have budgets and funding to hire services that I can offer (“smokejumping” troubled application projects, software design, technology needs anlysis, due diligence, contract software development). Just the other night I commented that I need to do something to get name recognition – work for a firm with a known brand, write a book, get some press, something.

Thus, today, as I walked through Aldi I was thinking not so much about groceries but about branding and identity, about how we pick and find those things that interest us. Of late I have been doing a lot of reading about economics, mostly from critics of mainstream economics. A critique that does not get enough attention is that mainstream ecomonics assumes that the actors in a marketplace have complete information about their options (and the impact of choices) prior to making those choices.

Consider, for a moment, the choice of buying groceries. Mostly, people buy them based on a combination of brand and price, but we all first make choices that restrict us without us knowing – starting with where we live, but continueing to where we choose to shop (and when we shop). All these factors constrict the universe of possible choices even before we are confronted with our options in the store. Once in the store we have both the usual choice between brands, and the other choice between paths to the same end – i.e. chicken or pork etc.

Likewise, in business, when looking at how to proceed a company has many options – continue with existing partners and staff, ask current partners for suggestions, approach new vendors directly, ask others for advice etc. At times the choice is defined in a limited way – “do we buy an Oracle database or SQL Server” but the best businesses first explore “What are we trying to accomplish?” then they explore “How can we do that?”.

But how do businesses pick the partners and products they work with? At times they take a seemingly rational approach of a formal evaluation of the options, frequently done in partnership with a research firm, but more often they work with firms or products they have heard of, the famous “you don’t get fired for picking IBM” phenomenon.

To tie this to networks, we learn of our options in an economic context by the networks to which we belong. Importantly, this is also true at a macro as well as micro level – in the case of what we personally buy at the grocery store and in the case of what we buy in our roles as businesspeople.

Frequently discusions of networks talk about growing networks, talk about navigating networks, perhaps talk about the large scale structure of the network, but rarely are practical implications of Networks and our particular position within discussed. For almost everything in business (and personally) there are a multitude of options for how to resolve a particular challenge, rarely can we test and evaluate each option, instead, we typically look to a limited set of options and make a decision. Mostly, these are options from people (or firms) close to us in our network, occasionally we’ll reach out to a more distant node – via learning of them somehow, via a chain of relationships something.

So, I think if I were to map out the “network” involved in selling my consulting services it would show the larger competitors for consulting services – firms with national/international brands, it would show a few smaller firms that I am personally aware of, it might include a large number of unknown competitors that I am not aware of. Also on the “network map” would be the possible clients. Many would already have relationships with some of my competitors. Specifically, as well, corporations are made up of individuals – so my network map should also track relationships between firms, but also relationships between people.

Then, in looking at my own personal network, I can start to look at where there might be opportunities for me to explore. One set would be possible clients where I have strong relationships and my compititors have weak links only – I’m currently pursuing one such client a large city agency which has few vendors at present, where I have strong ties, and where their needs and my services match up quite well.

I can also look at and evaluate potential opportunities in this manner – by considering which partnerships (or even employee/sub-contractor agreements) might help me land the type of deals I am inerested in working on.

More on this in upcoming posts – as always, feel free to leave comments here, or contact me privately to discuss further.

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